Comments
Target: ₹1,978
CMP: ₹1,496.60
We maintain Buy on SBI Life Insurance Company considering the attractive valuation and no major change in medium/long-term potential VNB growth/RoEV.
While some adjustments in channel preference may/may not impact near-term VNB growth proposition, we believe current valuation correction is overdone considering the scope of possibilities around lower bancassurance growth being able to offset by higher other channel growth and margin improvement.
Margin improvement theory could also be supported by longer-term comparison with other countries who have higher VNB margins. SBI Life could also be expected to deliver some positive operating variances which could help RoEV, as shown in history. SBI Life introduced a new product under ULIP category, “Smart Fortune Builder”, two months back
We back the long-term story basis: available distribution and margin levers to clock over 15 per cent VNB CAGR; and strong track record of 26 per cent VNB CAGR between FY19-24 which included low bancassurance volume growth between FY19-21. SBI Life remains better placed within industry in terms of lower levels of guaranteed products, cost structure and deeper population access.
Comments
Comments
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